Here's How Much You'd Have If You Invested $1000 in Palo Alto Networks a Decade Ago
For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in Palo Alto Networks (PANW) ten years ago? It may not have been easy to hold on to PANW for all that time, but if you did, how much would your investment be worth today?
Palo Alto Networks' Business In-Depth
With that in mind, let's take a look at Palo Alto Networks' main business drivers.
Santa Clara, CA-based Palo Alto Networks, Inc. offers network security solutions to enterprises, service providers and government entities worldwide.
The company's next generation firewall products deliver natively integrated application, user, and content visibility and control through its operating system, hardware and software architecture. It serves the enterprise network security market, which includes Firewall, Unified Threat Management (UTM), Web Gateway, Intrusion Detection and Prevention, and Virtual Private Network technologies.
Through its products and subscription services, Palo Alto provides integrated protection against dynamic security threats while simplifying the IT security infrastructure. Its solutions incorporate application-specific integrated circuits, hardware architecture, operating system, and associated security and networking functions.
The company’s network security gateways protect customer data, reduce security complexities and lower total cost of ownership. Customers can implement their security policies on traffic between internal networks and the Internet, as well as between internal and private networks shared with partners.
The company has a single operating segment. However, the company announces its revenues from products and services separately. For fiscal 2023, the company reported total revenues of $6.89 billion, which grew 25.3% year over year.
Palo Alto’s fiscal 2023 revenues from its products increased 15.8% year over year to $1.58 billion. Revenues from subscriptions and support grew 28.4% to $5.31 billion.
Further, Palo Alto operates across different geographic regions, including the Americas, Europe, the Middle East, and Africa (EMEA) and the Asia-Pacific and Japan (APAC).
The company faces competition from large companies like Cisco and Juniper, independent security vendors such as Symantec, Check Point, Fortinet, FireEye and several other small companies.
Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Palo Alto Networks a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in May 2014 would be worth $13,860.28, or a 1,286.03% gain, as of May 28, 2024. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 177.46% and gold's return of 77.20% over the same time frame.
Going forward, analysts are expecting more upside for PANW.
Palo Alto has been benefiting from continuous deal wins and the increasing adoption of its next-generation security platforms, attributable to the rise in the hybrid work environment and the heightened need for stronger security. PANW’s strong back-to-back quarterly performances reflect its sustained focus on product innovation, a shift in its business model to subscription-based services, platform integration and continued investments in the go-to-market strategy. The normalization of the supply chain is also aiding growth across the Products, Services and Subscription segments. However, softening IT spending amid macroeconomic headwinds might hurt its near-term prospects. Forex headwinds and higher marketing and sales expenses are likely to continue hurting its profitability. Also, high acquisition-related expenses are denting margins.
Over the past four weeks, shares have rallied 9.61%, and there have been 1 higher earnings estimate revisions in the past two months for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.
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